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TMI Blog1993 (2) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... see resiled from his earlier stand and contended that he was not the owner of the gold. The Income-tax Officer (the ITO) rejected this contention and treated a sum of Rs. 84,000, being the market value of the gold at the material time, as the assessee's income from undisclosed sources, by invoking the provisions of section 69A of the Act. The Appellate Assistant Commissioner of Income-tax (the AAC) upheld the finding of the Income-tax Officer in regard to the ownership of the gold but took the view that an addition to be made on that account required to be quantified with reference to the international price of gold and not the market price prevailing in India. The assessee had accepted the order of the Appellate Assistant Commissioner. However, the Revenue went up in appeal before the Tribunal and contended that the gold biscuits should have been valued at the market price prevailing in India and not at the international price as held by the Appellate Assistant Commissioner. The Tribunal accepted the stand taken by the Department and reversed the decision of the Appellate Assistant Commissioner and thereby restored the original addition of Rs. 84,000 made by the Income-tax Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istant Commissioner ?" Learned counsel for the Revenue submitted that even in the case of "deemed income" included in the total income of the assessee, the assessee would be liable to penalty under section 271(1)(c) of the Act. In this connection, he relied on certain decisions of the Punjab and Haryana High Court as well as of the Andhra Pradesh High Court in the case of CIT v. Aya Singh Ishar Singh [1973] 92 ITR 182 (P H), CIT v. Behari Lal Pyare Lal [1977] 107 ITR 587 (P H), Hindustan Tools Mfg. Co. v. CIT [1976] 102 ITR 174 (P H), CIT v. Chandulal [1985] 152 ITR 238 (AP). Thereafter, he referred to the decision of the Supreme Court in the case of Chuharmal v. CIT [1988] 172 ITR 250, wherein, according to him, on identical facts and circumstances obtaining in that case, the Supreme Court had upheld the penalty imposed under section 271(1)(c) of the Act. He, therefore, strongly urged that the questions referred to us should be answered in favour of the Revenue. As none appeared on behalf of the assessee, we had requested Shri. Tripathi to be amicus curiae and assist us in disposing of this reference. Shri Tripathi for the assessee submitted that, since the penalty proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of CIT v. Mussadilal Ram Bharose [1987] 165 ITR 14 and of the Gujarat High Court in the case of CIT v. Lakhdhir Lalji [1972] 85 ITR 77. According to him, unless and until the provisions of the Explanation to section 271(1)(c) of the Act are specifically invoked by the Inspecting Assistant Commissioner, we should not consider the said provisions in deciding the issues raised in the present reference. He, therefore, urged that we should answer both the questions referred to us against the Revenue and in favour of the assessee. Learned counsel for the Revenue, in his reply, vehemently argued that by not mentioning the Explanation in the show-cause notice issued by the Inspecting Assistant Commissioner or by not specifically invoking the provisions of the Explanation to section 271(1)(c) of the Act, the Revenue is not prevented from imposing penalty under section 271(1)(c) of the Act on the main provision of the section. In other words, according to him, by not mentioning the Explanation in the show-cause notice, no prejudice would be caused to the Revenue and, therefore, we should consider the same as was done in the case before the Supreme Court. In order to apprecia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case within the mischief of the main provisions of section 271(1)(c) of the Act. In the instant case, it is not in dispute that the provision of the Explanation was not invoked nor was it mentioned in the show-cause notice issued to the assessee. On due consideration of the submissions made on behalf of the parties and the material available on record coupled with the relevant provisions discussed above, we are of the view that no fault could be found in the order of the Tribunal under reference. It is by now trite law that the assessment proceedings and penalty proceedings are two separate and distinct proceedings. The fact that certain additions were made in the assessment proceedings would not automatically justify the Revenue to impose penalty under section 271(1)(c) of the Act. It is also a well-established principle that the provisions relating to penalty proceedings are quasi-criminal in nature and, therefore, the burden is large on the Revenue to establish the charge before imposing penalty under section 271(1)(c) of the Act, more so, when the provision of the Explanation to that section has not been invoked. In the instant case, it is quite apparent from the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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